Oil prices fall on surging US crude stockpiles, economic concerns

CNBC

Reuters

KEY POINTS
  • Brent crude futures, the international benchmark for oil prices, were at $70.62 per barrel at 0109 GMT, down 37 cents, or 0.5 percent, from their last close.
  • U.S. West Texas Intermediate (WTI) crude futures were down by 31 cents, or 0.5 percent, at $61.11 per barrel.
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A Petrobras oil platform floats in the Atlantic Ocean near Guanabara Bay in Rio de Janeiro.
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Oil prices dropped on Thursday, extending falls from the previous session amid surging U.S. crude inventories and weak demand from refineries.

Brent crude futures, the international benchmark for oil prices, were at $70.62 per barrel at 0109 GMT, down 37 cents, or 0.5 percent, from their last close.

U.S. West Texas Intermediate (WTI) crude futures were down by 31 cents, or 0.5 percent, at $61.11 per barrel.

Crude futures already fell by around 2 percent the previous day.

“Rising inventories and a slowdown with refined product demand could suggest we could see further pressure (on prices),” said Edward Moya, senior analyst at futures brokerage OANDA.

U.S. crude oil inventories rose last week, hitting their highest levels since July 2017, due to weak refinery demand, the Energy Information Administration said on Wednesday.

Commercial U.S. crude inventories rose by 4.7 million barrels in the week ended May 17, to 476.8 million barrels, their highest since July 2017, the EIA data showed.

Beyond weak refinery demand for feedstock crude oil, the increase in commercial inventories also came on the back of planned sales of U.S. strategic petroleum reserves (SPR) into the commercial market.

U.S. crude oil production climbed by 100,000 barrels per day (bpd) to 12.2 million bpd, putting output near its record of 12.3 million bpd reached late last month.

Ole Hansen, head of commodity strategy at Saxo Bank, said “concerns about slowing (oil) demand growth due to the negative impact on the global economy of the U.S.-China trade war ” were also weighing on oil prices.

Countering these bearish price factors have been escalating political tensions between the United States and Iran, as well as ongoing supply cuts led by the Organization of the Petroleum Exporting Countries (OPEC) that started in January in an effort to prop up the market.

“Large but opposing forces have kept Brent in a $70-$75 per barrel range in recent weeks,” Morgan Stanley said in a note on oil markets published this week.

“Macro economic data has rapidly deteriorated, and this is reflected in weaker oil demand. At the same time, downside risk to supply is materializing in key countries (adding to OPEC’s production cuts),” the U.S. bank said.

“On balance, however, we still see tightness in 2H19,” Morgan Stanley said, adding it expected Brent to trade in the $75-$80 per barrel range in the second half of 2019.

French bank BNP Paribas said high inventories meant that OPEC would likely keep its voluntary supply cuts in place.

“Supply management is here to stay,” the bank said.

Oil slides on rising US crude stockpiles, Saudi vow to keep market balanced

CNBC

Reuters

KEY POINTS
  • Brent crude futures were down 38 cents, or 0.5 percent, at $71.80 at barrel by 0219 GMT, having risen 21 cents on Tuesday.
  • U.S. West Texas Intermediate (WTI) crude futures for July delivery were down 58 cents, or 0.9 percent, at $62.55. The June contract expired on Tuesday, settling at $62.99 a barrel, down 11 cents.
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Oil prices fell on Wednesday after industry data showed an increase in U.S.crude inventories and as Saudi Arabia pledged to keep markets balanced.

Brent crude futures were down 38 cents, or 0.5 percent, at $71.80 at barrel by 0219 GMT, having risen 21 cents on Tuesday.

U.S. West Texas Intermediate (WTI) crude futures for July delivery were down 58 cents, or 0.9 percent, at $62.55. The June contract expired on Tuesday, settling at $62.99 a barrel, down 11 cents.

The American Petroleum Institute (API) said on Tuesday that U.S. crude stockpiles rose by 2.4 million barrels last week, to 480.2 million barrels, compared with analysts’ expectations for a decrease of 599,000 barrels.

Official data from the U.S Energy Information Administration’s oil stockpiles report is due later on Wednesday.

Outside the United States, Saudi Arabia on Wednesday said it was committed to a balanced and sustainable oil market.

Saudi Arabia has been at the forefront of supply cuts led by the Organization of the Petroleum Exporting Countries (OPEC), of which the kingdom is the de-facto leader, which started in January and are aimed at reducing global oversupply that emerged in 2018.

Because of the cuts, Bank of America Merrill Lynch said crude output by OPEC and its allies fell by 2.3 million barrels per day (bpd) between November 2018 and April 2019. That has helped push up Brent crude prices by more than a third since the start of the year.

The bank said some of the cuts’ impact was offset by a slowdown in global oil demand growth due to trade tensions to just 0.7 million bpd in the fourth quarter of 2018 and the first quarter of this year, versus a five-year average of 1.5 million bpd.

Beyond market fundamentals, oil traders are eying the tensions between the United States and Iran.

U.S. President Donald Trump on Monday threatened Iran with “great force” if it attacked U.S. interests in the Middle East.

On Tuesday, acting U.S. Defense Secretary Patrick Shanahan said threats from Iran remained high.

Tensions have risen since Trump re-imposed sanctions on Iranian oil exports to try to strangle the country’s economy and force Tehran to halt its nuclear program.

Oil rises on escalating US-Iran tensions; trade war concerns weigh

CNBC

Reuters

KEY POINTS
  • Brent crude futures, the international benchmark for oil prices, were at $72.03 per barrel at 0118 GMT, up 6 cents, or 0.1 percent, from their last close.
  • U.S. West Texas Intermediate (WTI) crude futures were up by 12 cents, or 0.2 percent, at $63.22 per barrel.
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A truck used to carry sand for fracking is washed in a truck stop in Odessa, Texas.
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Oil prices edged up on Tuesday on escalating tensions between the United States and Iran and on signs that producer club OPEC will continue withholding supply this year.

However, gains were checked by concerns that a prolonged Sino-U.S. trade war could lead to a global economic slowdown.

Brent crude futures, the international benchmark for oil prices, were at $72.03 per barrel at 0118 GMT, up 6 cents, or 0.1 percent, from their last close.

U.S. West Texas Intermediate (WTI) crude futures were up by 12 cents, or 0.2 percent, at $63.22 per barrel.

Prices were driven up by rising tensions between the United States and Iran.

U.S. President Donald Trump on Monday threatened Iran with “great force” if it attacked U.S. interests in the Middle East. This came after a rocket attack in Iraq’s capital Baghdad, which Washington suspects to have been organized by militia with ties to Iran.

Iran said on Tuesday that it would resist U.S. pressure, declining further talks under current circumstances.

ANZ bank said the rising tension in the Middle East meant a “risk premium is reflected in the price” of crude oil.

The tension comes amid an already tight market as the Organization of the Petroleum Exporting Countries (OPEC), Russia and other non-OPEC producers have been withholding supply since the start of the year to prop up prices.

A meeting has been scheduled for June 25-26 to discuss the policy, but the cartel is now considering moving the event to July 3-4, according to OPEC sources on Monday, with its de-facto leader Saudi Arabia signaling a willingness to continue withholding output.

Price gains were constrained by pressure on financial markets, which have been dragged down this week by worries that the United States and China are digging in for a long, costly trade war, which could result in a broad global slowdown.

Singapore, seen as a bellwether for the health of the global economy, on Tuesday posted its lowest quarterly growth in nearly a decade of 1.2 percent year-on-year.

Political risks may be supporting oil prices, but that’s likely just short term, JP Morgan says

KEY POINTS
  • Oil prices jumped on Monday after Saudi Energy Minister Khalid al-Falih indicated there was a consensus among OPEC and allied oil producers to continue limiting supply.
  • Still, the current price support is likely short-lived due to the rise of U.S. shale energy, which has shortened the market cycle for oil, according to a J.P. Morgan expert.
  • “It’s difficult to make a case why oil prices materially move up from here,” said Scott Darling, J.P. Morgan’s head of Asia Pacific oil and gas research.

Oil prices jumped on Monday after Saudi Arabia indicated a possible rollover of output curbs amid political supply risks, but that support is likely to be short-lived due to fundamental changes in the energy industry, an expert said on Monday.

“It’s alright to talk about supply-side risks, but that’s sort of near-term … I don’t think expectations for oil prices have actually gone up,” said Scott Darling, J.P. Morgan’s head of Asia Pacific oil and gas research.

That’s because of the rise of U.S. shale energy and slowing demand due to global economic uncertainties, Darling told CNBC’s “Squawk Box.” J.P. Morgan expects OPEC to extend its oil output cuts to 2020.

Oil prices jumped on Monday after Saudi Energy Minister Khalid al-Falih indicated there was a consensus among OPEC and allied oil producers to continue limiting supply.

Falih said the main option discussed at a ministerial panel meeting during the day was for a rollover of the output curbs agreed by OPEC and non-members in the second half of 2019. Still, he said, “things can change by June.”

OPEC, Russia and other non-member producers, an alliance known as OPEC+, agreed to reduce output by 1.2 million barrels per day from Jan. 1 for six months, a deal designed to stop inventories building up and weakening prices.

Brent crude futures were at $73.23 a barrel at 12:06 p.m. HK/SIN, up $1.02, or 1.4%, from their last close. Brent closed down 0.6% on Friday.

J.P. Morgan’s forecast for Brent crude is $75 per barrel by the end of the second quarter of 2019. For the full year, however, Brent crude will average $71 a barrel for 2019 and will weaken to $60 a barrel from 2021, said Darling.

Darling’s comments come as the market expects Iranian oil exports to drop further in May and Venezuelan shipments could fall again in coming weeks due to U.S. sanctions.

Moreover, tensions between Saudi Arabia and Iran are running high after last week’s apparent attacks on two Saudi oil tankers off the UAE coast and another on Saudi oil facilities inside the kingdom.

Riyadh accused Tehran of ordering the drone strikes on oil pumping stations, for which Yemen’s Iran-aligned Houthi group claimed responsibility. The UAE has blamed no one for the tanker sabotage. Iran has distanced itself from both sets of attacks.

The attacks come as the United States and Iran spar over Washington’s tightening of sanctions aimed at cutting Iranian oil exports to zero, and an increased U.S. military presence in the Gulf over perceived Iranian threats to U.S. interests.

Still, the current price support is likely short-lived due to the rise of U.S. shale energy, which has shortened the market cycle for oil, according to the J.P. Morgan expert.

“It’s difficult to make a case why oil prices materially move up from here,” said Darling.

—Reuters contributed to this report.

Oil rises as Middle East tensions mounts, set for weekly gains

CNBC

Reuters

KEY POINTS
  • Brent crude futures were at $73.00 a barrel at 0303 GMT, up 38 cents, or 0.5%, from their last close, rising for a fourth straight session. Brent was up 3.4% for the week, on track for its first gain in three weeks.
  • U.S. West Texas Intermediate (WTI) crude futures were at $63.32 per barrel, up 46 cents, or 0.7%. WTI was also up for a fourth day and was headed for a weekly gain of 2.7%, the first rise in four weeks.
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A worker is seen at the new CPF3 oil station in the Halfaya oilfield in southern of Maysan province, Halfaya, Iraq December 12, 2018.
Essam al-Sudani | Reuters

Oil prices rose again on Friday and were on track for the first weekly gains this month, as rising tensions in the Middle East stoked fears of supply disruptions.

Brent crude futures were at $73.00 a barrel at 0303 GMT, up 38 cents, or 0.5%, from their last close, rising for a fourth straight session.

Brent was up 3.4% for the week, on track for its first gain in three weeks.

U.S. West Texas Intermediate (WTI) crude futures were at $63.32 per barrel, up 46 cents, or 0.7%. WTI was also up for a fourth day and was headed for a weekly gain of 2.7%, the first rise in four weeks.

Saudi-led military coalition in Yemen carried out several air strikes on the Houthi-held capital Sanaa on Thursday after the Iranian-aligned movement claimed responsibility for drone attacks on two Saudi oil pumping stations earlier in the week.

Earlier this week, U.S. staff were evacuated from the American embassy in Baghdad, while U.S. President Donald Trump ordered the deployment of an aircraft carrier group, B-52 bombers and Patriot missiles to the Middle East.

“When tensions are this high, with the U.S. deploying a sizable military force, even a mistake or a tactical error by Iran could ignite the Middle East powder keg,” Stephen Innes, head of trading and market strategy at SPI Asset Management told Reuters by email.

“There are lots of supply risks with tensions this high,” he said, adding prices could test 2019 highs reached in April.

Still, Trump has told his top advisers he does not want to get the United States involved in a war with Iran, three U.S. officials said on Thursday.

The market is also awaiting a decision from the Organization of the Petroleum Exporting Countries (OPEC) and other producers over whether to continue with supply cuts that have boosted prices more than 30% so far this year.

A meeting of OPEC’s ministerial monitoring committee in Saudi Arabia this weekend will assess member states’ commitment to a deal reducing oil production, Iraq’s oil minister said on Thursday.